In recent years we have seen an increasing number of claims brought on the basis of the legal concept of proprietary estoppel. Proprietary estoppel claims can have particular relevance in the agricultural sector and involve a claim by a party to land belonging to another. This claim is based on a promise made to that person and reliance they have placed upon that promise.
In 2018, for example, there were twelve claims heard in the High Court raising proprietary estoppel. As a result the prevalence of such claims continues to increase and there is more awareness of this basis for making a claim.
To establish a claim in proprietary estoppel the person bringing the claim must establish three key limbs of the claim:
If a claimant is able to establish all three limbs of the test the Court must then consider whether it would be “unconscionable” to allow the party who made the promise to renege on that promise. There is wide jurisdiction for the Court to determine how the breach of promise might be remedied. The remedy will depend entirely upon the facts of the particular case but options available to the Court include transferring land, granting a lease and awarding compensation.
The law on proprietary estoppel has remained unchanged over many years but in more recent cases the Courts have confirmed that they will take a retrospective approach – looking at the point when the claimant discovered the promise was not going to be kept; whether under the terms of a Will on the death of the person making the promise or on the breakdown of the relationship between the two parties.
There are a vast number of proprietary estoppel claims brought involving farms and farming families.
In 2015, James Davies was successful in overturning his father’s Will after proving that his father promised him the family’s £1 million farm. James Davies had given up his dream of becoming a police officer and worked on the farm for a rate of 10 pence per hour after his father promised that the farm would pass to him when he died. In addition he invested money improving the family business after his parents retired and understood he was investing in his own future as the farm would be his.
James gave evidence that his father paid him a pittance but promised him “one day all this will be yours”. In fact, Tom Davies’ Will left the farm – which had been in the Davies family for generations – equally between James, his three brothers and his sister meaning that James would receive only a one fifth interest in the farm.
The Court awarded James the entirety of the farm at Prengwyn near Llandysul in Wales, disinheriting the four other children.
Such claims do not always succeed. In 2017, Sam James claimed that he devoted his life to working on his father’s farm and that Allen James promised that one day the family business at Pennymore Pitt Farm in Dorset would be his.
Sam James worked tirelessly in the family business for over 35 years but when his father died he discovered that Allen James had made a Will two years earlier which left him nothing from his father’s £3 million estate and instead provided for his mother and sisters.
The Court was told that Sam James had been an “absolute grafter” and that he had relied on his father’s assurance that the farm would one day be his. Sam James argued both that he had a claim in proprietary estoppel on the basis of that promise and that his father’s Will was in fact invalid as he lacked capacity when he made it due to dementia and “pressure” applied to his father by his mother.
The Court heard that in 2004 Allen James arranged for a Will to be drawn up that left the farm to Sam but this was never executed. His later Will left part of Pennymore Farm to his wife and one daughter with the younger daughter inheriting on her mother’s death.
Sam James failed in his claim for proprietary estoppel. Judge Paul Matthews said: ‘In my judgment, Sam’s eagerness to inherit the farmland from his father has caused him to persuade himself that he was being promised something when he was not. Allen James did not intend his words in that way, and did not intend them to be relied upon subsequently by Sam.”
One factor the Court took into account was the fact that Sam James had been working for proper remuneration and had been a partner in the family haulage business, taking land worth approximately £1 million and £200,000 in cash when the family partnership was dissolved in 2009.
The two cases show that merely asserting that a promise was made does not in itself establish a claim in proprietary estoppel and the Courts will look very carefully at the facts of the individual case before interfering with the terms of a Will.
The 2016 case of Guest v Guest reiterated that where proprietary estoppel is made out, the Court will only be concerned to find a remedy that will enforce the promise that had been made. The function of the Court is not to provide compensatory damages.
The Court will consider what needs to be done to compensate the claimant for the detriment they have suffered as a result of their reliance on the proven promise.
In the case of Wills v Sowray in 2020 two brothers brought proprietary estoppel claims. Unusually they were not related to the deceased but had enjoyed a “quasi-familial” relationship with him. On his death the deceased’s estate passed under the intestacy rules to his estranged daughter. The brothers argued that they had each been promised specific parts of the deceased’s estate and the Court found their claim to be made out – awarding them those specific assets.
Claims can be avoided if care is taken to ensure that all relevant parties know of any promises that are made and Wills reflect carefully the promises that have been made, rather than leaving assets in a completely different way.
In partnerships – often verbally agreed in farming situations – having a formal written partnership agreement can help to defeat a later claim. In Horsford v Horsford (decided in 2020) the presence of formal documentation which recorded the terms of a partnership was useful to the Court in determining how a claim should be resolved. The Court in that case found that the documentation had established what the son was entitled to expect and that it would have been possible for him to seek to negotiate terms if he wished to. In Horsford, the son’s claim to a greater share was dismissed.
The earlier case of Habberfield v Habberfield which went to Appeal in 2018 also involved written evidence. In that case, the Court awarded a payment of £1.17 million to Lucy Habberfield, the youngest daughter of farming couple Frank and Jane Habberfield.
When Frank died in 2014 his Will left his estate, valued at £2.5 million to his wife Jane. Lucy was the youngest of their four children and had worked on the farm since she was a child. She claimed that her father had promised her that she would take over the farm on his retirement and that she had relied, to her detriment, on this promise for a long period of time.
Lucy brought claims for Proprietary Estoppel and for reasonable provision under the Inheritance (Provision for Family and Dependants) Act 1975. Her claim was opposed by her mother who said that no such promises had ever been made and that even if Frank had made such a promise, Jane should not be bound by that.
Lucy produced a letter written by a surveyor in 2008 setting out how Lucy’s interest in the farm would increase. The Court found to be written evidence that her parents were considering passing the farm to her and reflected a promise made to her in return for her continuing to work on the farm.
Although the Court held that Lucy had made out her claim to the farm, the Court held that she had only shown that she was entitled to a significant part of the farm rather than the whole of it since there was evidence also of an intention on the part of Frank and Jane to benefit their other children.
Considering the remedy, Judge Birss determined that Jane should not be made to move out of her home and that it would not be right to split the farm up. Lucy was awarded £1.17 million as a cash equivalent to her 45% interest in the farm with such sum to be paid by Jane to Lucy.
Director at Howes Percival, Jennifer Laskey, who specialises in Contentious Probate claims comments
“There are no winners in farming disputes. Claims such as this often involve generations of the same family and result in battle lines being drawn between siblings. That can destroy relationships and lead to entrenched positions which ultimately only serve to increase the legal costs incurred.
It will always be better to avoid a proprietary estoppel claim by ensuring all family members know how a farm will be left on retirement or death and recording that and any partnership agreement or in a Will.
Where a dispute does arise, taking legal advice at the very earliest opportunity can ensure crucial evidence is preserved and that all options for settlement are considered – going to Court must be the last resort. Negotiation, mediation and collaborative options for agreeing a resolution have to be considered and can save not just legal costs but family relationships too”.
Catherine Scott, Head of the firm’s Private Client Services Group, confirms
“We have a wide range of specialist lawyers at Howes Percival who are adept at advising our farming clients on all aspects of their businesses and the management and organisation of their personal affairs.
Succession is a key issue for our clients and the cases mentioned in this article show how important it is that families plan for the future and communicate and record those intentions to avoid disputes later down the line.
Our Estates team includes specialists in agriculture, succession planning, tax, trusts and partnerships to ensure that our clients are able to make informed decisions that will protect them and future generations”.
For information please contact Jennifer Laskey on 01908 247546 or email [javascript protected email address].
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